Well of course

In other words, the economists – as is only right and proper – give us very interesting economic arguments. What they do not tell us is how to make the right political decisions.

For economics is not politics.

Allow me to be very generous indeed about politics: allow me to make the assumption that politics is not just about whichever peacock gets to strut the stage, that there is actually something more there.

With that, entirely ridiculous I know, assumption in mind, politics is about where we want to get to.

Economics isn\’t: it just isn\’t about stating that this is a desirable goal nor is it a method of deciding which is a desirable goal.

Economics, for example, has nothing at all to say about whether more or less inequality is a good thing to be striving for. Nada on whether greater physical wealth is better or worse than greater spiritual wealth, about whether we really ought to all make things with our hands or leave it all to machines or Chinee. Entirely sweet fuck all to say about what is the desirable society.

Which is to say that economics is not prescriptive: it is descriptive. While it doesn\’t tell us where we ought to be going, what we ought to be striving for, it does tell us, often but not as often as we\’d like, how to get from where we are to where we\’d like to be.

If you are some poor benighted state like Zaire and would prefer to be not quite so benighted like Botswana then you\’re best options are to hang Mobutu (prostate cancer will do), bring in the rule of law and property rights and things will get better. Slowly perhaps but they will. A mass civil war is contra-indicated.

If you have already decided that physical wealth, the increase of it, is what makes a desirable society then if you\’re a country like Portugal you\’ll need to have a bit more supply side revolution. Get rid of some of the red tape, kill off the rent seeking of the upper middle classes (and boy oh boy, does the stranglehold of the lawyers, accountants, the professional middle classes, the licensure state, need to be killed here).

If you think that medieval peasantry is the desirable end state for the oicks then Johnny Porritt, Friends of the Earth, Greenpeace, they\’ve all got the plan right there for you.

Economics can tell you how to get from A to B, it cannot tell you whether you ought to be striving for B. It can tell you what your proposed actions are likely to do, to take you not to B but to C or Z, it can tell you how to avoid getting to Z, but it cannot tell you whether B through Z are what you ought to be striving for: that\’s politics.

Which brings us to the two major problems about economics in our current political debates.

1) Almost everyone forgets this basic point. Just about everyone offering economic advice has already decided which of B through Z are the desired end goals. But they very rarely even understand themselves, let alone publicly acknowledge, that this is so. I\’m as guilty of it as anyone else. So, for example, my support for a paid market in live kidney donations: I regard it as obvious, unarguable in fact, that we would like to save more lives and save the NHS money while doing so. Others simply do not see it that way, they see it as obvious, unarguable, that bringing filthy lucre into such things will lead to a dystopian future of the poor flogging off limbs, mortgaging organs, to be fed to the crumbling rich.

2) All too many deliberately remain ignorant of what economics has to say about the possibility of their recommended actions leading to their desired goal. Take, as an example, the new laws extending \”workplace rights\” to temps on anything more than 12 week contracts. As (I think it was Tim Almond pointed out) this now means that someone taken on on a 12 month contract to cover for maternity leave will themselves gain the right to paid maternity leave. What?

All of which leads to: please do learn yer economics. That your goals are different is just fine. But unless you learn the social science which provides you the map of how to get where you want to go you\’re just going to end up stumbling around in the wilderness, aren\’t you?

And if you\’re one of the observers, rather than one of those trying to lead, you still need to know yer economics. That way you can work out who is lying to you, either about the path or the goal. Which is all of those peacocks strutting on the stage.

 

4 thoughts on “Well of course”

  1. This is very pertinent in relation to the R4 Keynes/Hayek debate. It was quite clear that Skidelsky was working from a completely different idea of the good society from the other three — even from Duncan Weldon.

    The result was that Skidelsky spent most of his time on politicised, emotionalised and moralised attacks on his opponents: his opening was to accuse Hayek of facilitating Hitler’s rise to power, and he later basically suggested that if you got a call wrong in a crisis then your entire set of ideas must be discarded as useless. He also had a bizarre interjection about the cost of liquidationism ‘in human lives’, and seemed to think that the Green Investment Bank was the perfect Keynesian solution. He was easily the weakest contributor.

    Weldon, at least, stuck the economic arguments. I don’t agree with him, by a long chalk, and would argue that he was misreading the data and the history; but he was Skidelsky’s superior in every respect.

  2. I’ll add another thing – economics can say something about whether a set of goals can all be achieved, or if some of them are mutually incompatible.
    Take for example the impossibility trinity, which says roughly that a country can’t have free capital flows and also a fixed exchange rate and an independent monetary policy. It can only have any two set of policies.

  3. Re: maternity leave. Social policy will also have its own economic consequences. Leaving aside for the moment whether women should have certain legal protections, (IMO wrongly called “rights”), all too often, policy distorts the market. On several occasions I have come across women who plan to leave employment on the birth of their first child, but for financial reasons do not tell their employer. They complete their maternity leve, return for a week or two, then resign. The result is that the employer has to find temperary cover, only to find that the change is permanent.

    Why should the employer have to put up with such guff?

  4. Surreptitious Evil

    Why should the employer have to put up with such guff?

    Because it is seen as an equitable outcome for social reasons. Redistributionist politics (from the same sort of ignorance – all profits are theft – that drives Mr Murphy) not economics.

    And, it has to be said, as an understandable backlash against the way women were treated by business in the past.

Leave a Reply

Your email address will not be published. Required fields are marked *